US stock futures turned volatile on Monday, 4 May, after conflicting reports surrounding a US warship near the Strait of Hormuz heightened investor anxiety over the ongoing Middle East conflict.
Futures tied to the S&P 500 were down 0.4%, while those linked to the Nasdaq-100 traded flat. Dow Jones Industrial Average futures, meanwhile, were down 0.1%.
Iran’s semi-official Fars news agency reported on Monday that two missiles had struck the US warship near the port of Jask, located at the southern entrance to the strait, where Iran’s navy maintains a base.
“The Islamic Republic of Iran has repeatedly announced that any passage through the Strait of Hormuz is not possible without obtaining official permission from Iran, and any disregard for this warning will be met with a decisive response from the armed forces,” the Fars report said.
However, US Central Command denied the report in a post on X, saying, “No US Navy ships have been struck. US forces are supporting Project Freedom and enforcing the naval blockade on Iranian ports.”
US President Donald Trump, in a social media post on Sunday, promised that the United States would “guide” ships out of the strait, warning that Iranian efforts to block them “will, unfortunately, have to be dealt with forcefully.”
Trump gave few details of the plan to assist ships and their crews that have been confined to the vital waterway and are running low on food and other essential supplies for more than two months into the conflict.
The swings in US stock futures highlighted the degree to which investors have become increasingly sensitive to headlines linked to the conflict, particularly as they continue to weigh geopolitical risks against an otherwise strong corporate earnings backdrop.
The deadlock between the United States and Iran over the crucial waterway threatens to prolong the oil market’s worst-ever supply disruption, raising fears of slower global economic growth and persistently higher inflation.
Nevertheless, the surging crude oil prices and elevated tensions in the Middle East failed to halt the US equity rally in April, as the S&P 500 concluded the month with a 10% gain, marking its biggest monthly percentage advance since November 2020, while the Nasdaq Composite posted its strongest monthly rally in six years. The Dow Jones also recorded its biggest monthly gain since November 2024.
Crude oil prices rebound after two-day slide
Tracking the reports of attacks, benchmark US crude rebounded by as much as $8.30 per barrel from the day’s low to climb back above the $107-a-barrel mark, while Brent crude, the international benchmark, gained 5.5% from the previous close to hit the day’s high of $114.19 per barrel. Both benchmarks have finished the last two sessions lower.
On Sunday, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC, said it would raise oil output targets by 188,000 barrels per day in June for seven members, marking the third consecutive monthly increase.
US stocks in focus today
According to Vested Finance, global markets started Monday’s session on a strong note but quickly reversed course as fresh tensions in the Middle East rattled investor sentiment.
The brokerage added that every spike in oil prices is now feeding directly into inflation concerns, and that pressure is beginning to reflect across multiple asset classes.
Bond yields moved higher, with the US 10-year climbing to around 4.4%, while the dollar strengthened as investors leaned toward safer assets. Interestingly, gold slipped, a reminder that this isn’t a clean “risk-off” move, but a market struggling to price multiple risks at once.
In terms of individual stocks, Vested Finance highlighted that eBay Inc jumped after a surprise takeover bid, while Coinbase Global Inc and Oracle Corporation also posted gains on positive company-specific developments.
But stepping back, Vested Finance said the broader market picture remains clear — global equities are trying to stay resilient on the back of strong earnings and AI-driven optimism, but every renewed escalation in oil prices and geopolitical tensions is pulling sentiment lower.
(With inputs from Reuters)
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
